Note: Tax equalisation is a term often used by HMRC and tax professionals to refer to a contractual arrangement under EP Appendix 6 between an employer and a foreign national employee working in the UK under which

The employee is entitled to a net amount of cash earnings and non-cash benefits

And

The employee agrees to meet all of the UK income tax arising from the cash earnings and non-cash benefits

To deal with modified PAYE schemes for employers who employ expatriate employees, subject to tax equalisation and who agree to bear part or all of the employee’s tax under a Tax Equalisation Agreement, made before 5 April 2006, follow steps 1 - 3 below.

For details of how to access any of the Employer Business Service functions, use PAYE057.